Bloomberg reports that the company is adopting a new defined contribution plan the new workers will be eligible for instead. The new capital accumulation plan will offer employees an annual contribution as a percent of salary based on the employees’ years of service. Lockheed will contribute from 3% to 6% of salary. Employees with fewer than nine years of service will receive 3% of salary, while employees with more than 30 years of service will receive 6% of salary, the company’s CFO Christopher Kubasik said, according to Bloomberg.
In addition to the new plan, new employees will still be eligible for the company’s existing 401(k) plan which receives a company match.
Lockheed’s pension expenses rose from $300 million in 2003 to $595 million in 2004. Kubasik said the costs this year will remain at around $600 million, according to Bloomberg. The company’s decision to close the DB plan to new workers is expected to save the company at least $125 million over the next 15 years.
In March, the company terminated retirement health benefits for new union employees at a fighter-jet plant in Marietta, Georgia, Bloomberg reports. Workers went on strike for a week to protest the plan termination before finally ratifying it. The company will likely propose a similar cut during labor talks next year at another plan in
According to Bloomberg, the company reported in a corporate filing in February thatcorporate contributions for retiree health benefits and life insurance rose to $457 million last year from $276 million in 2003.